Gordon Chang wonders whether a President Obama will “restrict trade with China.”
Absent from recent trade debates in the U.S. is the fact that last year all but $5.9 billion of China’s overall trade surplus of $262.2 billion related to sales to America. The temptation is that Obama will try to use this leverage over Beijing to restructure trade relations in the coming years. In President Bush’s second term, a fundamental realignment of ties with China was unthinkable. In view of the powerful forces at work in these volatile times, however, many of the assumptions we now make about trading with the Chinese may no longer be valid.
Lots of people mistakenly get charged up over trade deficits. But Chang, who has been predicting — or more accurately, hoping for – The Coming Collapse of China for a decade, should really know better than to take a bilateral trade imbalance seriously. Think about it: Japanese and Korean firms send goods into China for final assembly and shipment to the U.S. The U.S. trade deficit with China jumps but falls vis-a-vis Japan and Korea. Problem? No.
Anyway, Chang may not need an explicit Obama trade blockage to get his China crash wish. Washington’s more indirect but just as ill-conceived effort to cut the U.S. trade deficit via an inflationary weak-dollar has already worked its wicked protectionist magic — see, global panic and recession — and the question now is whether China’s juggernaut will merely slow, or succumb.